Bills Digest no. 145 2005–06

WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.

Background

Main provisions

The proposed amendment will broaden the range of goods which can
be disposed of by the Customs authorities. Currently, the Customs
authorities are only able to dispose of a limited range of goods:
perishable goods, live animals and unseaworthy vessels.
Item 1, proposed subsection
206(1A) will enable the disposal of any goods if the
relevant decision maker is satisfied that the retention of the good
would constitute a danger to the public health or safety. Such
goods will be classed as dangerous goods. The
Explanatory Memorandum supplies as examples for such dangerous
goods explosive materials and chemical or biological agents.

a place which has been set aside by a Collector under subsection
234AA(1) of the Customs Act (paragraph 234A(1)(a)), or

a ship, aircraft or wharf, or part of a wharf adjacent to that
wharf where a ship is berthed, at a time when the personal baggage
of disembarking embarking or passengers is examined (paragraph
234A(1)(b)).

The penalty for a violation of this provision is 50 penalty
units or $5 500.(1)

Under subsections 234A(1A) and (2), some persons are exempt from
the application of the general prohibition contained in subsection
234A(1). For example, the exemption applies to persons who enter a
place set aside under subsection 234AA(1) by authority or as a
holder of a specific security identification card (SIC) within the
meaning of section 213A of the Customs Act.(2) In the
latter case, it is also required that the person enters the place
for employment purposes.

The SIC is a card of a kind specified in regulations made under
the Customs Act (subsection 213A(7)). Regulation 170B of the
Customs Regulations 1926 (Regulations) specifies two forms of
security identification cards: the Aviation Security
Identification Card (ASIC) and the Visitor Identification
Card (VIC), both within the meaning of the Aviation Security
Transport Security Regulations 2005 (the ASTS Regulations).

Part 6 of the ASTS Regulations regulates security identification
and administrative issues relating to the ASIC and VIC. Under
Division 6.5 of the ASTS Regulations, both cards may be issued only
by so-called issuing bodies .(3) Division 6.3 of the
ASTS Regulations stipulates a range of bodies considered to be
issuing bodies . Currently, issuing bodies include:

Australian Customs Services (Regulation 6.12)

Civil Aviation Safety Authority (Regulation 6.12A)

Operators of security controlled airports (Regulation 6.14),
or

Other aviation industry participants or government agencies
which have been approved by the Secretary (Regulation 6.15)

ASIC s and VIC s can expire, in which case they have to be
returned to the issuing body under Regulation 6.45 of the ASTS
Regulations. Further, the issuing bodies are equipped with the
power to cancel an ASIC or VIC; Regulations 6.43 and 6.44 stipulate
various circumstances in which the cancellation of a security card
is mandatory or discretionary.

The changes will only apply to persons who hold a SIC.
Item 2 of Schedule 2 will repeal
the current paragraph 234A(1A)(ab), adding an additional
requirement that a person holding a ASIC or a VIC may only be
permitted to enter into, or be in or on at a relevant place if the
person is:

doing so for the purposes of his or her employment (proposed
subparagraph 234A(1A)(ab)(i)), and

not subject to a direction under proposed subsection
234A(1B) (proposed subparagraph
234A(1A)(ab)(ii)).

Item 4, proposed subsection 234A(1B) will
confer upon a collector within the meaning of the Customs Act the
power to issue a written notice to a SIC holder, directing the
person not to enter into, or be in or on:(4)

a place designated under subsection 234AA(1) (proposed
paragraph 234A(1B)(a)), or

a ship, aircraft or wharf, or part of a wharf adjacent to
that wharf where a ship is berthed, at a time when the personal
baggage of disembarking embarking or passengers is examined
(proposed paragraph 234A(1B)(b)).

Items 1 and 3 propose
amendments to paragraph 234A(1A)(a) and (b) which will clarify that
the authority to enter into, or be in or on either a place
designated under subsection 234AA(1) or a ship, aircraft or wharf,
must be given by a collector of customs.

Item 5 will repeal and substitute proposed
subsection 234A(2). It will remove the exemption
in 234A(1) from staff not involved in the management of a place
designated under subsection 234AA(1), wharfs, airports, ships or
parts thereof. As a result, cleaners, handymen, security staff and
other staff not involved in the management of these places will
need to satisfy one of the requirements set out in subsection
234A(1A).(5)

The proposed changes to the current law will add a second,
cumulative layer to the exemption contained in subsection 234A(1A).
This layer will be cumulative because under the proposed law, for a
person to be eligible to enter the areas specified in proposed
subsection 234A(1B), he or she must be:

the holder of a security identification card,
and

must not be subject to a written direction by the Customs
Authorities not to be in the place.

In the circumstance where a person is a holder of
a security identification card, it is proposed to tighten the
exemption from the offence in subsection 234A(1). In addition to
holding a [security identification] card, the person must also not
be subject to a written direction from a Collector not to enter
into, or be in or on the relevant place.(6)

Under current law, a variety of issuing bodies can issue
security identification cards to employees and visitors. The
proposed amendment will not only tighten the exemption in
subsection 234A(1A), but will give the Customs authorities a
stronger influence over who can access certain security sensitive
areas.

This second layer of control proposed in this amendment warrants
further comment:

first, on the face of the proposed amendment, the discretion
conferred upon the decision maker to issue a written notice
directing a person not to be in a particular area is unfettered.
The proposed legislation does not restrict the grounds upon which
such a notice may be issued, nor does it specify limits as to
against whom such a direction may be issued. Accordingly, based on
the amendment, it is at least feasible that persons who ought to
have access to places in which persons are held for the purpose of
questioning or examination, could be subject to such notices.
Examples would include lawyers who, despite being properly
authorised, may be prevented from accessing such areas,
significantly limiting their ability to advise persons of their
rights and duties when searched or interviewed. The Law Council of
Australia further mentioned union officials, doctors and
translators who could be subject to such
restrictions.(7) In reply, Customs argues that section
234AA areas are designated sterile areas only to be accessed by
certain people. Where the assistance of union officials or
doctors is needed, such persons would be granted temporary escorted
access to the area.(8)

second, it appears that a decision made under proposed
subsection 234(1B) will lack some of the hallmarks of natural
justice. There is no legislative requirement that the
decision-maker provides reasons for the decision to issue a
direction under proposed subsection 234(1B). Further, there is no
right to be heard granted to the person who will be subject to this
notice. In addition, it has been noted that:

persons affected by a written direction from the
[decision-maker] that they cannot enter Prescribed Places should be
entitled to seek review of the direction (by way of administrative
review and by way of judicial review).(9)

Customs has argued against this view that the decision made
under proposed subsection 234(1B) will be a real-time instrument so
that the review of such decisions is inappropriate to ensure the
integrity of Australia's borders.(10)

third, it seems that the amendment has the potential to
create an ambiguity as to the scope of the exemption provided for
in subsection 234A(1) of the Customs Act. On its face, the current
law distinguishes between two different locations:

the area referred to as the place pursuant to subsection
234AA(1), and

ships, aircrafts, wharfs or certain parts thereof (for the
convenience of the reader, this location is referred to as the
other place). (11)

The exemptions provided in subsection 234A(1A) reflect this
distinction, referring to the place in paragraphs 234A(1A)(a) and
(ab) and to ships, aircrafts, wharfs or a part of a wharf in
paragraph 234A(1A)(b). A further provision, subsection 234A(2) ,
will provide a further exemption to members of authorities which
have the management and control of airports and wharfs as long as
these persons are in or enter the place for the purpose of
management or control.(12)

Importantly, the power to issue notices under proposed
subsection 234A(1B) is limited to persons who hold a SIC. Once such
a notice is issued, it is envisaged that this person will be
prohibited from entering or being in a location referred to as the
place or the other place (proposed paragraphs 234A(1B)(a) and (b)
respectively). However, on a plain reading of paragraph
234A(1A)(ab), a security card holder may only be exempt from the
offence provision section 234A(1) if he or she enters into or be in
the place for employment purposes. As a corollary it seems to
follow that a security card holder is not exempt if he or she
enters into, or is in or on the other place without separate
authorisation. Against this background, the proposed insertion of
proposed paragraph 234(1B)(b) is peculiar as it seems to provide
the decision maker with the power to direct a person not to be
within an area which, as indicated above, should be off-limits for
security card holders in any event.

Parliament may want to consider whether the proposed amendment
should be modified to:

comply with fundamental principles of natural justice by
requiring the decision-maker to give reasons, providing for a right
to be heard and permitting access to administrative and judicial
review, and

remove the potential ambiguity by clarifying the precise scope
of exemptions applicable to security card holders.

The Bill proposes several amendments to the rules governing
where goods originate for the purposes of the Australia-US Free
Trade Agreement (AUSFTA). These rules are set out in Part VIII,
Division 1C-US Originating Goods of the Customs Act. The reader may
refer to the Bills
Digest and the
Explanatory Memorandum to the Australia-US Free Trade Agreement
Bill 2004 for a discussion and examples of the complex rules of
origin provisions.(13)

Under sections 153YA and YB, goods are considered to be wholly
obtained or produced entirely in the US if these goods fulfil
certain criteria. If they are considered to be wholly obtained or
produced entirely in the US, the goods qualify for preferential
tariff treatment under the AUSFTA.

The relevant criteria are set out in section 153YB. Under
paragraphs 153YB(2)(g) and (h), goods will qualify, for example, if
they are goods taken from:

the seabed, or beneath the seabed, outside the territorial
waters of the US by the US or a national of the US, but only if the
US has the right to exploit that part of the seabed, or

outer space by the US or a national of the US.

Importantly, both these criteria utilise the term national of
the US . The current provision in the Customs Act defines a
national of the US to be a natural person within the meaning given
by Annex 1‑A to Chapter 1 of the AUSFTA. Annex 1-A of
the AUSFTA prescribes that, with respect to the US, a national
means a national of the United States as defined in Title III of
the Immigration and Nationality Act or a permanent
resident.(14)

Items 1 to 4 of
Schedule 3 of the Bill will make changes to these
two criteria. Item 1 will repeal the current definition of national
set out above. Item 2 proposes to introduce a new definition of
person of the US into subsection 153YB(1), defining such person to
be a person of a Party, within the meaning, in so far as it relates
to the US, of Article 1.2 of the AUSFTA. Article 1.2 of the AUSFTA
stipulates a person of the US to mean a national or an enterprise
of the US. This Article futher provides that an enterprise of the
US means an enterprise constituted or organised under US law and
may include profit and not-for-profit entities, privately-owned or
governmentally-owned or controlled entities, including any
corporation, trust, partnership, sole proprietorship, joint
venture, association, or similar organization (Article 1.2.7. and
8. of the AUSFTA).

Items 3 and 4 will substitue the current wording of pragraphs
153YB(2)(g) and (h), inserting the proposed term person of the US .
This amendment will broaden the scope of proposed
paragraphs 153YB(2)(g) and (h) by
expanding what qualifies as a good wholly obtained or produced
entirely in the US. After passing the amendment, the provisions
will not be limited to natural person or national , but will
include any enterprise as defined in the AUSFTA.

Certain
goods made from non‑originating materials (Subdivision
D)

Subdivision D sets out rules to ascertain when certain goods
produced entirely in the US, or in the US and Australia, from
non‑originating materials only, or from non‑originating
materials and originating materials, are considered to be US
originating goods for the purposes of the Customs Act. A good will
only qualify as a US originating good if it fulfils any of three
requirements, including that the good satisfies:

the transformation test set out in subsection 153YE(8) or, for
example, that the non-originating material does not exceed 10
percent of the customs value of the goods (paragraph 153YE(2)(a)
and (b))

the regional value content requirement (paragraph 153YE(4)),
or

any other requirement set out in Schedule 1 of the Free
Trade Agreement Regulations (paragraph 153YE(7)).

The reader is referred to the Bills
Digest and the
Explanatory Memorandum to the Australia-US Free Trade Agreement
Bill 2004 for a discussion and examples of this complex
provision.(15)

Item 5 proposes to amend subparagraph 153
YE(2)(b)(i). This subparagraph provides that a good fulfils the
first requirement if the total value of all the
non‑originating materials does not exceed 10 percent of the
customs value of the good. The proposed amendment will clarify that
the non-originating materials referred to in this provisions are to
be materials which themselves do not satisfy the transformation
test as set out in subsection 153YE(8).

Subdivision E provides rules for assessing when clothing or
textile goods, produced either entirely in the US or in the US and
Australia from non‑originating materials or from both,
non‑originating and originating materials, will qualify as US
originating goods within the meaning of the Customs Act. Under the
current law, textiles or clothing will qualify as US originating
goods if the good:

falls within a tariff classification specified in the
Customs Act (paragraph 153YH(1)(a))

is produced entirely in the US, or entirely in the US and
Australia, from non‑originating materials only or from
non‑originating materials and originating materials
(paragraph 153YH(1)(b)), and

fulfils two further specific requirements (the First and Second
Requirement), including that the good fulfils the transformation
test or that it fulfils any other requirement contained in the Free
Trade Agreement Regulations (paragraph 153YH(1)(c), subsections
153YH(2) and (3)).

Item 6 of the Bill proposes to introduce a
further requirement. Proposed paragraph
153YH(1)(ba) will introduce a specific rule applicable to
elastomeric yarns: under the proposed law, these yarns must have
been produced entirely in the US or Australia to qualify as a US
originating good for the purposes of the Customs Act. This
amendment will better reflect Paragraph 7 of Article 4.2 of the
AUSFTA which relevantly reads:

7. [ ], a good containing elastomeric yarns in the
component of the good that determines the tariff classification of
the good shall be considered to be an originating good only if such
yarns are wholly formed in the territory of a Party.

A further note to be inserted after paragraph 153YH(1) will
clarify this amendment (items 7 and
8).

Items 9 to 11 will make
changes to the First Requirement, i.e. the change of classification
provision. Paragraph 6 of Article 4.2 of the AUSFTA stipulates that
textiles or clothing can be originating goods even though a certain
percentage of the component that determines the tariff
classification of the good is comprised of goods which are
non-originating. The threshold set out in this de minimis
provision is that a good will nonetheless be considered an
originating good if the total weight of all non-originating fibres
or yarns comprising the component that determines the
classification of the good, is not more than seven percent of the
total weight of that component.

The current provision does not distinguish between the fibres
and yarns which make up the component that determines the tariff
classification of the textile or clothing and any other fibres and
yarns which make up the good. Instead, the current provision only
provides that a good is an originating good if the total weight of
all the non‑originating materials does not exceed 7 percent
of the total weight of the goods , suggesting that a total weight
of less than 7 percent of any non-originating fibre or yarn
comprising the good suffices.

To rectify this imprecision, item 9 will repeal and substitute
subparagraph 153YH(2)(b)(i) to:

introduce the term relevant non-originating
material (that is material which is used to produce the component
which determines the classification of the good and does not
satisfy the transformation test, i.e. is non-originating; proposed
subsection 153YH(8)), and

clarify that the threshold of 7 per cent relevant
non-originating material is assessed against the weight of the
component that determines the classification of the good.

Together, the two measures will ensure that the First
Requirement is better aligned with the de minimis rule in
the AUSFTA.

A good shall not be considered to be an
originating good if the good undergoes subsequent production or
any other operation outside the territories of the Parties,
other than unloading, reloading, or any other operation necessary
to preserve it in good condition or to transport the good to the
territory of a Party [emphasis added].

The current law is narrower than this clause, providing merely a
good is not an originating good if it undergoes any process of
production in that country or place . Item 12 will
amend paragraph 153YL(1)(b) to reflect the broader wording of
Article 5.11, inserting the words or any other operation contained
in Article 5.11.

The proposed amendments in Schedule 4 must be
read together with the amendments relating to the unauthorised
entry provisions in Schedule 2 of this Bill. These amendments have
been discussed above.

Schedule 4 of the Bill proposes further changes to the security
identification card regime. As noted above, the Customs Act and
Regulations currently provide for two kinds of security
identification cards (SIC) the Aviation Security Identity Card
(ASIC) and the Visitors Identification Card (VIC). When issuing a
SIC, the issuing person has to relay certain information to
authorised officers of Customs. This so-called required identity
information is defined in section 213A of the Customs Act to
mean:

the name and address of the person

the person s date and place of birth

any other information prescribed by the regulation.

The Explanatory Memorandum notices that the gathering of this
information is essential because persons issued with an ASIC or VIC
can place a potential:

threat to the integrity and security of the
border. In order to monitor this threat, under section 213B of the
Customs Act , a person who issues an ASIC or a VIC to another
person in respect of an international airport must provide
specified information to an authorised officer of Customs within 7
days of doing so.(16)

However, under the current regime the relay of
information will only occur at the time of issuing the SIC, no
further provision of information to Customs is necessary
subsequently, for example, should the bearer of the SIC change the
address or name.

The proposed amendments are two-fold.

First, items 1 to 3 of
Schedule 4 will modify current subsections 213B(1) and (2),
requiring the issuing authority in relation to a SIC rather than
the issuing person to transmit the information to Customs. This
amendment will provide for continuity where the functions of one
issuing authority are taken over by another, for example, where
airport authorities are merged or taken over.

Item 4 of the Schedule 4 will enable Customs to
request an update to the required identity information. Proposed
subsection 213B(2A) will, upon request,
require an authority which issued a SIC to a person in relation to
specified airports to provide certain information to Customs.
The purpose of this requested information is to update the
information kept by Customs in relation to the holder of the
SIC.

Schedule 4 of the Bill must be read together with Schedule 2
discussed above. Together, the two Schedules provide Customs with a
powerful control mechanism over issuing authorities and holders of
SIC s: Schedule 4 enables Customs to update information available
in relation to the holders of SIC s whilst Schedule 2 allows
Customs to use this and other information to prohibit a SIC holder
to enter a place.

simplify reporting requirements for Australian importers
and exporters to improve the supply chain, and

allocate more resources away from known reliable traders or
low-risk cargo towards areas of high risk. (17)

To overcome the traditional one size fits all approach, the ACP
creates different categories of importers/exporters pursuant to
their compliance history, aiming at providing a preferred treatment
for those who have proven their compliance in the past.
Simplification of the reporting requirements is achieved by
requiring accredited clients to lodge only a minimum set of
information upon transaction, with other data to be submitted in
periodic intervals.

Traders with a proven high customs compliance standard will be
eligible to use, and benefit from, this program. Once accepted into
the ACP, the importer/exporter benefits from a more expedient
treatment.

The ACP is based on so-called import or export
information contracts (contracts) into which eligible
importers/exporters may enter with Customs.(18) Under
these contracts, importers/exporters undertake to meet specified
performance standards, to review regularly business processes and
standards and provide periodic declarations rather than individual
ones. Customs, in turn, is obliged to provide an alternative cargo
reporting system for specified goods and will clear goods with
minimum intervention.

The ACP has a history spanning some ten years.(19)
The core of the program was introduced as part of the Customs
Legislation Amendment and Repeal (International Trade
Modernisation) Act 2000.(20) After the terrorist
attacks on the World Trade Centre in New York on 9 September 2001,
the development of the ACP became closely linked with other aspects
of safety measures and trade modernisation, especially the Cargo
Management Re-engineering (CMR) Project and the Integrated Cargo
System (ICS).

The ACP is, in parts at least, a reaction to the tension between
strict requirements concerning border and trade or supply chain
security, for example flowing on from measures such as the:

US Container Security Initiative,(21) and

US Customs-Trade Partnership against Terrorism
(C-TPAT)(22)

on the one hand, and free trade requirements stipulated:

under the frameworks of the World Trade
Organisation (WTO),

in bilateral trade agreements, such as the Australia-US Free
Trade Agreement (AUSFTA)

The purpose of the proposed measures in Schedule 5 of the Bill
is to implement a scheme for the payment of [import] duty and
processing charges in relation to the ACP. (23) The
proposed regime is based on estimates and subsequent account
reconciliation, involving three charges, a Request for Cargo
Release (RCR) fee, a fee for periodic declarations and the
so-called accredited client monthly duty estimate .

Items 1 and 2 of Schedule 5 of
the Bill will amend subsection 4(1) of the Customs Act, inserting
new definitions for the terms accredited client and
accredited client payment day. An accredited
client will be a person who has entered into an import
information contract. The accredited client payment day
for a particular month means the 15th day of that month.

Item 5 repeals current subsection 71DC(2),
inserting proposed subsection 71DC(2) which
stipulates the mode for paying the request for container release
(RCR). It is proposed that accredited clients will have to pay RCR
processing charges on the accredited client payment day (under
proposed subsection 4(1) the 15th day of a month) for
the month following the month in which the goods were taken.

Item 8, proposed subsection
71DD(4A) will provide that import information contracts
must stipulate the method by which the so-called accredited
client monthly duty is calculated. The calculation method must
result in an amount described as approximately equal to the amount
of import duty that [importer] will be liable to in respect of
goods covered by the contract.

Item 9 will substitute current section 71DF
with proposed section 71DF. This new section will
require accredited clients or a nominated customs broker to send
electronically to Customs periodic declarations, providing
goods-related information to Customs as provided for in an approved
statement. Proposed subsection 71DF(2) will
prescribe the certain due dates on which the these declarations
must be transmitted to Customs. Unless prescribed otherwise, the
default due date is defined as the first day of the month following
the month during which the goods are taken to have been entered for
home consumption .

Item 11 repeals current subsection 71DG(2),
substituting this provision with proposed subsection
71DG(2). Proposed subsection 71DG(2) we
will stipulate the due date for the periodic declaration processing
charge. Of the due date will be of the accredited client payment
day for the month following the month during which the goods were
taken.

Item 12 will introduce a new set of provisions
which deals with the accredited client's liability for the
accredited claimed monthly duty estimate and the liability
for payment of import duty.

Proposed section 71DGA will set out the
liability for the accredited client monthly duty estimate. Under
proposed subsection 71DGA(2), the due date for
this estimate will be the accredited client payment day.
Proposed subsection 71DGA(3) provides that the
estimate must be worked out in accordance with the import
information contract.

Proposed section 71DGB regulates the payment of
import duty. Under proposed subsection
71DGB(1), the import duty payable on goods covered by an
import information contract will become payable on the accredited
client payment day for the month following the month during which
the goods were taken. Proposed subsection 71DGB(2)
provides for the reconciliation of the accredited client monthly
duty estimate against the amount of import duty which is payable by
the accredited client. Proposed subsection
71DGB(3) stipulates that any excess amount, that is the
amount which an accredited client has overpaid, will be dealt with
in the manner agreed between Customs and the party having entered
into the import information contract. Ways in which excess payments
could be dealt with include:

carrying forward of the excess amount into the next month,
or

refunding any excess amount to the accredited
client.

The
Explanatory Memorandum sets out a flowchart visualising the
accredited client payment structure devised under the proposed
amendments. This flowchart is reproduced here for the convenience
of the reader:(24)

Especially after September 11, measures to protect supply chains
in international trade from terrorism have become more important.
Nitsch and Schumacher have identified three possible effects that
international terrorism may have on trade, including that:

terrorism may lead to insecurity raising the costs of
doing business

the typical response to an increase in terrorist activity
is an increase in security measures, and

there is a risk of a direct destruction of traded
goods.(25)

As indicated above, the ACP is part of a package which is a
reaction to the tension between strict security requirements
concerning border and trade and supply chain security on the one
hand and the maintenance of free and unimpeded flow of goods on the
other.

However, the proposed amendments have not been uncontroversial.
In essence, it is possible to identify two major areas of
disagreement between parts of the industry, advisers to the
industry and the government.

The first key area of disagreement is about the level off
consultation between the industry and the government in the
preparation of those amendments. On the one hand it is argued
that the proposed amendments are the result of long consultations
between the industry and the government. The Business Partner Group
(BPG), comprised of major import and export companies, stated:

The BPG would like to assure the Committee that a
robust, open and in depth consultation process over many years has
arrived at what is considered a sound and realistic ACP
model.(26)

On the other hand it has been pointed out by some parts of the
industry that certain key players such as the Customs Brokers and
Forwarder Council of Australia (CBFCA) were surprised that when the
consultation fell dormant after 2003, the Government introduced the
measures in this Bill. The CBFCA argued that:

Since meetings between Customs and industry in
June 2003, the accreditation issue has, from a CBFCA perspective,
remained dormant and the CBFCA was surprised to note the program
re-emerging in the Bill.(27)

The second key area of disagreement relates to the actual
content of the proposed amendments, especially the issue of
deferral of payment. Some of the submissions made to the
recent Senate inquiry on this Bill have signalled their support for
the regime. For example, the Business Partner Group, comprised of
major import and export companies, endorses the proposed
regime.(28) On the other hand, especially the CBFCA and
the Law Council of Australia have noted their reservations to the
proposed regime. For example, the CBFCA, submitted to the Senate
inquiry that:

The program as foreshadowed, in the opinion of the
CBFCA, is unrealistic in efficiency or effectiveness for importers
in general, and service providers in particular. From the
CBFCA s perspective, consultation on key issues of the Bill with
the CBFCA has been non-existent and the CBFCA a query is the
rationale of the programme which gives little, if any, benefit to
the majority of importers and little cognisance of benefits to
service providers.(29)

There are certainly some issues for importers which flow from
the chosen regime based on estimates and subsequent account
reconciliation that may be considered. These include:

the proposed regime does not appear to be based on a true
deferral regime. Rather, the proposed mechanism takes the form of
an estimate/reconciliation method. Whilst there is some aspect of
deferral because the actual amount due is determined on a
particular day during the month succeeding the month the goods have
been imported, it is not a proper payment deferral because the
estimate will have to paid in advance

the advance payment of the estimate will affect importers
cash-flow, and

importers must put into place mechanisms which
allow them to provide accurate estimates. It has been noted that
these estimates are likely to be statements to customs for the
purposes of sections 243U and 243T of the Customs Act which are
strict liability offences for making false or misleading statements
to Customs which may or may not lead to a loss of duty.

Further issues which have been addressed include that the
proposed regime will only allow importers and their delegates to
join the ACP and it has been questioned whether this is a
sufficient implementation of Australia s obligations under the WCO
s Framework. In their
Summary of Submission to the Senate Legal and Constitutional
Committee, the Customs and International Transaction Committee
of the Law Council of Australia pointed out that:

Of particular concern to the Committee is that the
Framework is intended [to] afford benefits to all
interested parties in the supply chain (known as Authorised
Economic Operators). This would extend to transport companies,
custom brokers and freight forwarders. However, the ACP is
only limited to importers. The benefits of the ACP should be
extended to all other interested parties in the supply chain who
would otherwise be entitled to preferential or advantageous
treatment under the frameworks.(30)

The Customs and International Transaction Committee also noted
that the ACP in its current form appears to have no security
element required under the Framework.(31)

The measure proposed in Schedule 6 will expand the currently
available protection from criminal responsibility to situations in
which Customs officers, in the course of their duties, have certain
dealings with narcotic goods.

Items 1 and 2 propose to make
certain changes to subsections 233(3A), (3B) and (6) which are
necessary in the light of the insertion of proposed section
233BABA by virtue of item 3. Proposed
subsection 233BABA(1) will provide protection from
criminal responsibility to officers of customs who, in the course
of their duties:

possess or convey, or

facilitate the conveyance

of prohibited imports, prohibited exports or smuggled goods. By
virtue of this subsection, any such dealings are deemed not to be
an offence against a law of the Commonwealth, State or
Territory.

Proposed subsection 233BABA(2) provides
protection from criminal responsibility of identical scope to any
person who has such dealings with narcotic goods acting in
accordance with written instructions issued by an officer of
customs acting in the course of his or her duties.

The measures contained in Schedule 7 of the Bill relate to the
issue of seizure warrants. In essence, the measures prescribe a
further factor which a judicial officer may consider when
determining whether an authorised officer was able to demonstrate
the necessity for the seizure of particular goods under section 203
of the Customs Act.

This particular measure has been proposed earlier. It was part
of the Customs Legislation Amendment Act (No. 1) Bill 2003 (CLAA
2003) (introduced on 12 December 2002 as Customs Legislation
Amendment Act (No. 2) Bill 2002). Then, the measure was part of
Schedule 3 which proposed technical amendments relating to trade
modernisation.

However, despite passing the CLAA 2003, the amendment to section
203 Customs Act did not occur as it was misdescribed. The reason
for this misdescription was a combination of:

first the delay in passing the CLAA 2003, and

second the date on which Schedule 3, Part 3 of the
CLAA 2003 took effect.

Schedule 3, Part 3 of the CLAA repealed paragraph 203(3)(e) upon
which the measure contained in Schedule 3, Part 1 depended. It was
intended to repeal this paragraph prospectively, with the repeal
taking effect on 1 July 2003. However, due to the delay in passing
the CLAA 2003 and the omission to change the prospective repeal day
for paragraph 203(3)(e), the prospective repeal became a
retrospective repeal by the time the Bill was passed into law in
December 2003. As a result, the retrospective repeal withdrew the
legislative basis for the proposed amendment.

Item 1 will introduce proposed paragraph
203(3)(e) which again introduces a further factor which a judicial
officer may consider when determining whether an authorised officer
was able to demonstrate the necessity for the seizure of particular
goods under section 203 of the Customs Act.

Item 2 is an application provision which
ensures that the application of paragraph 203(3)(e) commences
prospectively.

Items 3 and 4 repeal two items
in Schedule 3 of the Customs Legislation Amendment Act (No. 1)
Act 2003 which are no longer
required.

Endnotes

On the basis that 1 penalty unit is the equivalent of $110. See
section 4AA of the Crimes Act 1914.

Please note the proposed changes to section 213B contained in
Schedule 4 of this Bill. See discussion in this Digest below.

The power to issue an ASIC is conferred upon the Secretary or a
delegate under Regulations 6.27 and 6.28 of the ASTS Regulations.
The power to issue a VIC is conferred under Regulations 6.27 and
6.38 of the ASTS Regulations.

Note that the
Explanatory Memorandum, ibid, seems to suggest that the term
the place and what is referred to above as the other place can be
used interchangeably, using the term relevant place . However, this
is not supported by the text of the law which indicates a
differentiation between the two places (paragraphs 234A(1A)(a) and
(b)).

Employees of these authorities, such as cleaners and handymen,
will be excluded from this exemption under proposed subsection
234A(2).

Under subsection 71DD(1) of the Customs Act, a Customs CEO has
the authority to enter into import information
contracts (contracts) with certain importers for the
purpose of enabling so-called request for cargo release (RCR).
However, subsection 71DD(2) requires that before entering into
contracts, the CEO must be satisfied that the importer can
provide Customs with accurate information. Whether the importer can
satisfy the CEO depends upon the result of an audit. Section 114 BB
of the Customs Act makes similar rules with respect to exporters,
allowing a Customs CEO to enter into export information
contracts (contracts) with an exporter for the
purpose of enabling the use of accredited client export
approval numbers (ACEANS) in connection with the export of the
person s goods. Again, whether the exporter qualifies for the
program must be assessed on the basis of an audit.

P Zalai, Manager, Customs Brokers and Forwarders Council of
Australia, has been cited noting that the program was floated in
1996. See E Connors, Incentives for border security plan not paid,
Australian Financial Review, 17 May 2004, p. 7.

N Brew, Ripples from 9/11: the US Container Security Initiative
and its Implications for Australia , Current
Issues Brief, Department of Parliamentary Services,
Canberra, 2002-3.

According to the US Department of Homeland Security, Customs and
Border Protection Branch, C-TPAT is a voluntary government-business
initiative to build cooperative relationships that strengthen and
improve overall international supply chain and U.S. border security
. US Department of Homeland Security, Customs and Border Protection
Branch, Customs-Trade Partnership Against Terrorism (C-TPAT):
Partnership to Secure the Supply Chain , available at http://www.cbp.gov/xp/cgov/import/commercial_enforcement/ctpat,
accessed 28 April 2006.

Thomas John
29 May 2006
Bills Digest Service
Parliamentary Library

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